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Natalka [10]
2 years ago
8

Your firm is considering an investment that will cost $920,000 today. The investment will produce cash flows of $450,000 in year

1, $270,000 in years 2 through 4, and $200,000 in year 5. The discount rate that your firm uses for projects of this type is 11.25%. What is the investment's net present value
Business
1 answer:
stich3 [128]2 years ago
5 0

Based on the information given the investment's net present value is $192,369.06.

Using this formula

Net Present Value(NPV)=-Initial cost+ Cash flow during time period/(Discount rate+ Cash flow time)

Let plug in the formula

NPV=-920,000+450,000÷(1+0.1125)^1+270,000÷(1+0.1125)^2+270,000÷(1+0.1125)^3+200,000÷(1+0.1125)^4

NPV=-920,000+450,000÷(1.1125)^1+270,000÷(1.1125)^2+270,000÷(1.1125)^3+200,000÷(1.1125)^4

NPV=$192,369.06

Inconclusion the investment's net present value is $192,369.06.

Learn more here:<em>brainly.com/question/13451251</em>

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Answer: I decreases; II decreases; III decreases

Explanation:

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The Fed increasing money supply means that there is more money in the economy. This shifts the supply curve to the right thus having the effect of reducing Interests rates as there is more money available for loans.

Total Household Wealth increasing means that Households have less of an incentive to borrow money. This reduces the demand for interest rates so interest rates decrease.

5 0
3 years ago
On August 1, 20Y7, Rafael Masey established Planet Realty, which completed the following transactions during the month:
Sphinxa [80]

Answer:

a. Dr Cash 17,500

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Cr Sales commission 13,300

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e. Dr Account payable 1,150

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f. Dr Dividend 1,800

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g. Dr Automobile expense 1,500

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h. Dr Salaries expense 2,800

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i. Dr Supplies expense 1,050

Cr Supplies 1,050

Explanation:

Preparation of Journal entry

a. Dr Cash 17,500

Cr Common Stock 17,500

b. Dr Supplies 2,300

Cr Account payable 2,300

c. Dr Cash 13,300

Cr Sales commission 13,300

d. Dr Rent expense 3,000

Cr Cash 3,000

e. Dr Account payable 1,150

Cr Cash 1,150

f. Dr Dividend 1,800

Cr Cash 1, 800

g. Dr Automobile expense 1,500

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Cr Cash 1,900

(1,500+400)

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8 0
2 years ago
Match the following:
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Explanation:

1. If butter complements margarine for instance, and there occurs a sudden increase in the price of butter leading to lower demand, this would affect the demand for margarine negatively leading to a fall in the demand for margarine.

2. If this goods are substitutes the demand for butter will increase when the price of margarine rises.

This is because it is only natural for people to switch to the next best alternative (substitute) that fills the same purpose or needs.

3. Remember Ice cream and ice cream cones complementary goods; meaning the demand for one increases the demand for the other and vice versa.

4. If the price of ice cream increases, demand would also decrease for ice cream as consumers are usually sensitive to price.

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5 0
3 years ago
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Answer:

Explanation:

This is an Ordinary Annuity question. You can solve this using a financial calculator. I'm using (TI BA II Plus)

N; duration = 20

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7 0
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Answer:

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where,

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= $10.49

4 0
3 years ago
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